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Monday, September 8, 2008

Mundra Port and Special Economic Zone (SEZ), promoted by the Adani Group, is located in Kutch District, Gujarat and is the largest SEZ of India. Spread over an area of over 100 sq km, Mundra Port and Special Economic Zone is a multi-product and large format private SEZ approved by the Government of India.

Business :

Mundra port handles dry bulk, crude and and container cargo. The port has among the deepest drafts on the west coast which makes it possible for larger ships to berth and also makes it less expensive for shipping lines. Apart from being well-located , it is also connected by rail with Inland Container Deports in(ICDs) in northern India.

The company is also developing a special economic zone over 32,000 acres along the Mundra port, of which 50 per cent is already understood to be in its possession.

The SEZ is expected to attract manufacturers that need to be located close to the port and which would benefit from the tax benefits.

The port handled much higher volumes of crude and cargo in FY08 and should continue to do brisk business.

India's biggest non-major port, the Rs 817 crore Mundra Port and SEZ was busy in FY08, putting through a volume of 28.8 million tonnes, 46 per cent higher than in FY07. That together with lease rentals of Rs 52 crore from the company's special economic zone (SEZ) pushed up revenues by about 41 per cent.

Valuations :

Mundra Port had raised Rs 1,771 crore through an initial public offering at a price of Rs 440 per share in November 2007. We estimate that the company could close FY09 with revenues of close to Rs 1,100 crore and a net profit of Rs 500 crore.

With the facilities at the port being better utilised, the operating profit margin was up 1170 basis points at 65.4 per cent. However, the net profit increased just over 12 per cent to Rs 210 crore largely because tax benefits to the tune of Rs 130 crore were reversed.